GRENKE invests in expanding digitalisation, presents preliminary results for 2022 financial year and publishes outlook for 2023

GRENKE invests in expanding digitalisation, presents preliminary results for 2022 financial year and publishes outlook for 2023

• New digitalisation programme "Digital Excellence" includes additional investments of EUR 45 to 50 million over the next three years
• End-to-end digitalisation in the core leasing business turning into a driver for speed, efficiency and growth
• Preliminary figures 2022: Consolidated Group net profit at upper end of the guidance range at EUR 84.2 million (2021: EUR 95.2 million or EUR 72.2 million excluding gain from the sale of viafintech)
• Outlook 2023: New leasing business between EUR 2.6 billion and EUR 2.8 billion; Consolidated Group net profit between EUR 80 million and EUR 90 million, including first investment tranche of EUR 15 million

Baden-Baden, March 2, 2023: GRENKE, global financing partner for small and medium-sized enterprises, is launching a digitalisation programme under the name "Digital Excellence" with immediate effect. In order to continue its successful international growth and expansion strategy, the Company will invest an additional total of EUR 45 million to EUR 50 million in the digital optimisation of the entire value chain. This will occur in over 30 countries over the next three years. Particularly the relatively new subsidiaries located in the future core markets of Australia, Canada and the USA will be equipped from their outset with state-of-the-art infrastructure to take full advantage of the exceptional growth potential in those markets.

The digitalisation programme is based on a transformation to cloud technology. The investment in this technology marks the largest single initiative, amounting to one-third of the funds invested in the programme. The remaining investments will distributed across the automation of all core processes in the leasing business. An estimated EUR 15 million will be incurred as additional expenses in the current financial year.

CEO Dr Sebastian Hirsch, says: "The launch of our digitalisation programme "Digital Excellence" comes at exactly the right time. Last year, we significantly expanded our new business and stabilised our margin despite the dynamic interest rate environment. We have achieved our financial targets, are back on track for growth, and are now in a position to accelerate the digitalisation of our international business. We are therefore making a quantum leap towards our ideal of Plug'n'Lease – the best in fast and simple lease financing for SMEs and their investments, no matter what the object. At the same time, we are strengthening the basis for our further expansion in the small-ticket business. For GRENKE, digitalisation is turning into a driver of speed, efficiency and growth. We expect net savings from our investments for the first time as early as 2025."

The goal of "Digital Excellence" is end-to-end digitalisation of the internal processes in our core leasing business as fully as possible. This will allow us to significantly scale our business in new as well as existing markets and strengthen our growth. For example, in the future, the processing of a lease application will take just seconds instead of minutes ("instant decision"). With the expanded digitalisation initiative, GRENKE is optimally positioning itself to respond to changing customer requirements and set new trends in the capabilities offered by leasing for the investment projects of small and medium-sized enterprises. This includes, for example, offering lease financing for new object categories. Some of the investment measures, such as the expansion of cloud technology, were already planned and are now merely being brought forward and implemented more quickly to accompany the ambitious growth path in new business.

Today, GRENKE also presented preliminary, unaudited figures for the 2022 financial year. Consolidated Group net profit amounted to EUR 84.2 million (2021: EUR 95.2 million) and was at the upper end of the guidance range of EUR 75 million to EUR 85 million. Based on this result, the Board of Directors and the Supervisory Board will propose a dividend of EUR 0.45 per share for the 2022 financial year (2021: EUR 0.51). This would correspond to a payout ratio of 25 percent, which would be in line with the Consolidated Group's dividend policy.

For the 2023 financial year, GRENKE expects new leasing business in the range of EUR 2.6 billion and EUR 2.8 billion and is targeting Consolidated Group net profit of EUR 80 million to EUR 90 million. For the 2024 financial year, the Board of Directors continues to expect new leasing business of EUR 3.4 billion. With the implementation of the digitalisation programme in the years ahead, the Consolidated Group profit in 2024 is anticipated to reach approximately EUR 120 million, instead of EUR 140 million as previously forecast. The break-even point should be reached as early as the 2025 financial year. This is expected to be the first year when the increase in efficiency reflected in the sales and administrative expenses will exceed the cost of IT investments.

Overview of preliminary, unaudited group figures for 2022 according to IFRS (in EUR millions)

The 2022 financial year figures in this release are preliminary and unaudited. The Annual Report 2022 will be published on March 16, 2023. The Annual Report will be available at https://www.grenke.com/investor-relations/reports-and-presentations/.

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About GRENKE

The GRENKE Group (GRENKE) is a global financing partner for small and medium-sized companies. As a one-stop shop for customers, GRENKE’s products range from flexible small-ticket leasing and demand-driven bank products to convenient factoring. Fast and easy processing and personal contact with customers and partners are at the centre of GRENKE’s activities.

Founded in 1978 in Baden-Baden, the Group operates in 33 countries and employs more than 1,900 staff (measured in terms of full-time equivalents) worldwide. GRENKE shares are listed on the Frankfurt Stock Exchange (ISIN DE000A161N30).